Making a name pays off for BenQ

The world's No. 5 liquid-crystal-display (LCD) monitor vendor is almost ready to enjoy the fruits of its hard work to boost its brand awareness, bucking the dismal outlook predicted for the electronics industry as a whole. Lee Kun-yao, chairman of BenQ Corp, gave some hints about the three-year-old company's future plans during an interview with `Taipei Times' staff reporter Lisa Wang last week

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BenQ chairman Lee Kun-yao gestures as he talks with a reporter about what his three-year old consumer-electronics company hopes to achieve next year and in 2006.

PHOTO: SEAN CHAO, TAIPEI TIMES

Taipei Times: Can you give us a glimpse of the 2005 outlook for the ever-changing electronics industry?

Lee Kun-yao (李焜耀): Visibility for the industry remains vague. Not a single company in the industry will be overly optimistic about the global economy next year in view of rising interest rates and surging crude oil prices [which could slow down consumer spending].

What's more, doubts [about recovery] in the electronics industry, with the LCD sector in particular, further dim that visibility. Conse-quently, BenQ (明基電通) is very cautious with every step we take, like most electronics companies.

Despite low visibility of the industry as a whole, we feel BenQ will still enjoy a big jump next year boosted by its own-brand business. We are seeing potential growth from Chinese market next year. [Editor's note: one-fifth of BenQ's own-brand earnings come from China.]

Our initial goal is to double our brand sales next year [from an estimated US$2 billion this year], but there is always uncertainty ahead.

TT: Can you elaborate further on what will be the major forces driving BenQ's brand growth for 2005?

Lee: We will have to count on Asian and European markets, which are the major markets for BenQ's brand business. We have made significant progress in the third quar-ter. BenQ became the world's No. 5 computer LCD monitor vendor in the quarter to September, up from the 11th position. More signs show that the growth momentum will carry through next year.

In China, a fresh wave of LCD computer monitor replacements for bulky cathode-ray-tub (CRT) computers is setting in to fuel demand in the current quarter, lagging two years behind the Taiwanese market.

Notebook computers will be another force pushing up BenQ's growth, as consumers increasingly favor laptop computers when considering buying a second computer.

China is one of the fastest-growing markets. The penetration rate of notebook computers among households remains low, while broadband technology has gradually gained wider popularity in hotels there. Those two factors make laptops enticing to Chinese people.

Chinese businessmen, particularly, spend lots time traveling around the nation. With a notebook computer along the way, they can enjoy the convenience of high technology on the run.

In addition to China, we also found that demand in Southeast Asian nations is picking up, such as in Thailand. We plan to set up more branches in the region next year.

TT: Some investors expect BenQ to start enjoying a substantial gain from own-brand operation in 2006 in terms of earnings after LCD TVs take off. Do you agree?

Lee: BenQ's LCD TVs are actually a hit on the market. But we believe the growth strength will come from all segments, from digital music players to handsets, rather than entirely from slim-screen TVs.

Besides, our gross margin will further improve [from a current 11 percent] next year as we strengthen our product portfolios. We plan to roll out more high-end products next year including a 46-inch LCD TV and projectors with high price tags.

TT: Gartner Inc recently boldly forecast that one-third of the world's top 10 computer vendors will disappear next year. If this consolidation materializes, those computer giants will have more power to expand their market shares. Will the shake-up in the global computer landscape affect BenQ's survival?